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Filed by EchoStar Communications Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Companies: Hughes Electronics Corporation,
General Motors Corporation,
and EchoStar Communications Corporation
Commission File No. 333-84472
Date: May 13, 2002
Set forth below is a transcript of a live Charlie Chat television show that is
now being rebroadcast from time to time.
In connection with the proposed transactions, on March 18, 2002, General Motors
Corporation ("GM"), HEC Holdings, Inc. ("Hughes Holdings") and EchoStar
Communications Corporation ("EchoStar") filed preliminary materials with the
Securities and Exchange Commission ("SEC"), including a Registration Statement
of Hughes Holdings on Form S-4 that contains a consent solicitation
statement/information statement/prospectus. These materials are not yet final
and will be amended. Holders of GM $1-2/3 and GM Class H common stock are urged
to read the definitive versions of these materials, as well as any other
relevant documents filed or that will be filed with the SEC, as they become
available, because these documents contain or will contain important
information. The preliminary materials filed on March 18, 2002, the definitive
versions of these materials and other relevant materials (when they become
available), and any other documents filed by GM, Hughes Electronics Corporation
("Hughes"), Hughes Holdings or EchoStar with the SEC may be obtained for free at
the SEC's website, www.sec.gov, and GM stockholders will receive information at
an appropriate time on how to obtain transaction-related documents for free from
GM.
GM and its directors and executive officers, Hughes and certain of its officers,
and EchoStar and certain of its executive officers may be deemed to be
participants in GM's solicitation of consents from the holders of GM $1-2/3
common stock and GM Class H common stock in connection with the proposed
transactions. Information regarding the participants and their interests in the
solicitation was filed pursuant to Rule 425 with the SEC by EchoStar on November
1, 2001 and by each of GM and Hughes on November 16, 2001. Investors may obtain
additional information regarding the interests of the participants by reading
the preliminary consent solicitation statement/information statement/prospectus
filed with the SEC on March 18, 2002 and the definitive consent solicitation
statement/information statement/prospectus when it becomes available.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
Materials included in this document contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause our actual results to be materially different
from historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of GM,
EchoStar, Hughes, or a combined EchoStar and Hughes, to differ materially, many
of which are beyond the control of EchoStar, Hughes, Hughes Holdings or GM
include, but are not limited to, the following: (1) the businesses of EchoStar
and Hughes may not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; (2) expected benefits and
synergies from the combination may not be realized within the expected time
frame or at all; (3) revenues following the transaction may be lower than
expected; (4) operating costs, customer loss and business disruption including,
without limitation, difficulties in maintaining relationships with employees,
customers, clients or suppliers, may be greater than expected following the
transaction; (5) generating the incremental growth in the subscriber base of the
combined company may be more costly or difficult than expected; (6) the
regulatory approvals required for the transaction may not be obtained on the
terms expected or on the anticipated schedule; (7) the effects of legislative
and regulatory changes; (8) an inability to obtain certain retransmission
consents; (9) an inability to retain necessary authorizations from the FCC; (10)
an increase in competition from cable as a result of digital cable or otherwise,
direct broadcast satellite, other satellite system operators, and other
providers of subscription television services; (11) the introduction of new
technologies and competitors into the subscription television business; (12)
changes in labor, programming, equipment and capital costs; (13) future
acquisitions, strategic partnership and divestitures; (14) general business and
economic conditions; and (15) other risks described from time to time in
periodic reports filed by EchoStar, Hughes or GM with the Securities and
Exchange Commission. You are urged to consider statements that include the words
"may," "will," "would," "could," "should," "believes," "estimates," "projects,"
"potential," "expects," "plans," "anticipates," "intends," "continues,"
"forecast," "designed," "goal," or the negative of those words or other
comparable words to be uncertain and forward-looking. This cautionary statement
applies to all forward-looking statements included in this document.
RETAIL CHARLIE CHAT
MAY 9, 2002
- ---------------
INTRODUCTION
>> YOU HAVE A SHOW?
>> THAT'S CORRECT
>> THAT'S WHAT IT SAYS ON THE SCRIPT.
>> THAT'S WHAT IT IS. THE AMAZING THING IS I THINK WE'RE AHEAD OF THESE GUYS.
PEOPLE ARE ASKING QUESTIONS, WE'VE GOT ANSWERS, WE'VE GOT PLANS.
>> WELCOME TO THE CHAT, WHAT CAN WE ANSWER FOR YOU TODAY?
>> IF OUR CUSTOMERS WANT IT AND IF IT'S ATTRACTIVE FOR OUR CUSTOMERS, WE'LL BE
IN THERE TRYING TO GET IT. WE'RE REALLY PROUD OF THE EFFORTS THAT A LOT OF THE
FELLOW RETAILERS MADE AND A LOT OF OUR OWN EMPLOYEES.
>> IT'S A GREAT OFFER FOR THE CUSTOMERS, A HUGE OPPORTUNITY FOR YOU TO IMPROVE
YOUR REVENUES, TELL THEM WHY. OR DO YOU WANT ME TO TELL THEM?
>>YOU CAN TELL THEM.
>> OKAY, WE'RE OPEN TO SUGGESTION, IF YOU'VE GOT THINGS, ANYBODY WHO WANTS TO
TAKE THE TIME WE'D APPRECIATE IT.
- ---------------
Announcer Hello and welcome to the Charlie Chat, our regular
opportunity to tell you what's new here at Dish
Network. Of course we love to get your emails and
your live calls, so let's begin. Here's Charlie Ergen
and Jim DeFranco.
J. DeFranco Welcome to the Charlie Chat. It's good to have you
with us. Charlie, it's good to have you with us.
You've been on the road quite a bit, but it's nice to
have you back.
C. Ergen They let me come to work in Denver today.
J. DeFranco We've got a great show planned for you, we've got a
lot to cover. Obviously we want to update you on
things that are happening, what Charlie's been
spending some of his time with and addition we're
going to talk about Echo VII and some of the spot
beams, things that have evolved there and how that's
helping us out and what you can expect in the future.
We're going to be talking a little bit more about
promotions, some updates to make sure you're clear on
things, obviously spend a lot of time taking your
questions.
And at the end of the show, which Charlie may not
even be aware of this, we're going to actually talk
about Dish Pro in more detail. So we have a video
we're going to do, we're going to do that. We're
going to have Paul Langer on and actually take some
of your questions realties to that. That's some
feedback we got from Team Summit about the Dish Pro
Seminar, there was a lot of interest there, we want
to make sure people understand that and so on and so
forth.
So we've got an action packed full show. So why don't
we start with tell us a
________________________________________________________________________________
CHARLIE CHAT PAGE 1
little about what you've been up to and maybe you can
give us another perspective on how we're doing on the
merger and so on.
C. Ergen Well, 100% of my time is working on the merger
because I think that's the most important thing for
you guys and for our industry, and for our employees
because obviously we're in a much more competitive
world. You may have seen some of the articles about
the cable industry, their recent convention, all the
things the cable industry is doing to move ahead of
where we are as a DVS industry. So the merger is
really the thing that will continue to allow our
industry to continue to grow and without the merger
I'm very concerned that obviously we probably have
peaked in terms of growth.
As an industry we would be on the downhill slide in
terms of momentum, in terms of the size. Looks like
the size of the market actually peaked and some of
the revisions that we've seen to subscriber counts
that have come out over the last year or two, our
industry hasn't grown as fast as advertised and it
looks like it may have peaked in the year 1999 or
2000. And obviously 2001 was less than 2000 and
obviously at this point 2002 is shaping up to be less
net growth than last year.
I gave a presentation at Team Summit and I think a
lot of folks who weren't able to attend Team Summit
wanted to see some of that so I'm going to condense
that down a little bit and go through a couple
things.
I think the key thing is what does the merger mean to
you? I now you probably don't care so much about how
it affects EchoStar or Hughes, but you certainly care
about how it affects you. The biggest thing is that
it allows our industry to continue to grow and
compete. The cable industry has gone digital, almost
the whole entire platform is digital today so we lost
that advantage of being the only digital platform out
there. Obviously they had the advantage of also being
analog so they can hook up to TV sets, all the TV
sets are cable ready so they have a second set, third
set, fourth set advantage.
But beyond that, they've now made moves to start the
high definition television and they can broadcast
state and local city high definition channels,
something we can't do as an industry. They have now
gone to video on demand and even talking about free
video on demand for channels. I think you may have
seen the announcement where I think ComCast is going
to put up NBC Tonight Show, Today Show, for their
customers so any time during the day they can go
ahead and get that for free. Those are advantages
that they have because their architecture is local in
nature, ours is national in nature, so we have to
have a bandwidth to compete with that.
We still have some 45 million homes out there that we
don't have local/local in. We still don't have the
capacity to do all the high definition television to
compete. We certainly don't have the ability to have
the bandwidth to do
________________________________________________________________________________
CHARLIE CHAT PAGE 2
video on demand, or are near video on demand without
this merger. So when you go back to that slide now
and you put all that in perspective, we believe the
merger allows us to regain some momentum and get
close to a level playing field with cable. I don't
think we get all the way there, but we get close to a
level playing field and while cable is 67 million
subscribers we believe we can grow our industry in
the year 2007 over the next five years to 36 million
households with the merger.
Now realize without the merger we believe that number
is some 11 or 12 million homes less than that 36
million homes, so you're looking at 23-24 million
homes. Now you can imagine if there's another 11-12
million homes out there for you guys, that's going to
be good for your business. That would mean your
business is going to be materially higher than it
otherwise would be without the merger.
The second part of that is broadband. Obviously cable
has the ability to do broadband today. We don't have
that ability. Part of our subscriber growth is going
to come from the broadband world. We believe with the
addition of the specialized satellites, and critical
mass, and combining our subscribers bases and our
technologies, and our uplink centers that we can make
broadband competitive with cable, particularly in
rural America. And we believe that some of those new
subscriber additions are going to come from the
broadband world, some will be broadband only, but
most will be broadband and video in terms of a
bundle.
So again that's really what the merger means and I
think that a lot of people don't really understand
that the marketplace changes so dramatically, that
the competitive environment continues to get tougher,
and tougher and tougher. I know that talking to
people at Team Summit, Jim, that people understand
the marketplace is tougher. When somebody goes to
digital cable it's difficult to get those people as a
customer back from that. They have that option today
and we don't have that analog advantage on second
sets.
What does it mean to you in terms of how you build
your business? I think there's going to be any number
of areas where you can build your business in terms
of what you need to do, but first and foremost I
think you have to prepare for growth. With the merger
I believe there will be quite a bit more growth than
there otherwise would be.
You want to make sure that you focus on a few
businesses. It could be sales, it could be service
and installation. It could be installs and upgrades.
We know that we're going to have to spend several
billion dollars to upgrade our current customers, our
current industry customers out there. Somebody has to
do that, I know it's not going to be me and Jim,
they're going to do that. It's not going to be the
consumer electronics big retailers, it's going to be
the people who are local and are in the area. So
there's quite a bit of revenue that's going to flow
from that. The successful retailer may do any or all
of
________________________________________________________________________________
CHARLIE CHAT PAGE 3
those different things and some people may just focus
on sales, some people may just focus on installs and
upgrades and some people may focus on all those
things.
As usual, to be successful we don't guarantee you're
going to be successful, we're going to try to explain
to you and we did at Team Summit, the kind of
environment that we see that's going to be out there,
that we see that will be out there so that you can
figure out how you might change your business. If you
don't change your business I'm pretty sure that
ultimately if you don't change your business than
ultimately you have a hard time surviving. Obviously
from a merger perspective it was something that we
saw we had to do to change our business to compete.
Recipe for success. That really hasn't changed since
we've been in business. I think that because you're
already in the business you can trade leverage in
your business with all the new business we hope to
bring and obviously it's dedication, hard work,
creativity and obviously putting the customer number
one so that you get a good reputation in your local
area and reap the rewards from being able to do that.
I think most folks understand when their local cities
are up there, they have another competitive avenue
for customers when they have broadband as a service
that's competitive, not a $70 service, not something
that costs $700 for equipment, but we're talking
about something that may start as low as $30 a month
for a basic broadband, always on service that has
good speed, then you can be very competitive in the
marketplace. That kind of wraps ...
J. DeFranco We got a lot of good feedback from Team Summit. The
people who were there seemed to understand a little
better how the merger will affect them and how they
can grow their business and so on.
C. Ergen I thought so. I talked to a lot of folks who I think
that said, gee, coming into Team Summit we had some
concerns about the merger. We thought maybe that
wasn't going to be a good thing for us. I think
having seen all the facts I think that the vast
majority of people realize it is important for your
future, for the merger. And again one of the things
you can do, whatever your opinion is we do have a
website that you can register your opinion with
people and again I suggest that. I don't want people
who complain. I don't want people who whine. I like
people who are active and whether you support the
merger or don't support the merger you can visit our
website and you can make your opinions known to the
regulators that are out there who will make the
decisions on this.
J. DeFranco Okay, great. I think as always, Charlie, and this is
something that really came out not only as it relates
to the merger, but just with the growth, as the
business expands obviously, we expect that to be
because of the merger and all the work that goes
along with that. But people say well how does it
affect me? And I'm kind of bringing this forward a
little bit with the additional
________________________________________________________________________________
CHARLIE CHAT PAGE 4
distribution as a combined company. As an example
we've recently signed Radio Shack up. We had a few
people at Team Summit say well what about Radio
Shack, how is that going to affect me? And of course
in fact I made a bet with a guy one night at the bar
that his business would go up as a result of Radio
Shack, because of the additional awareness that we
have out there and so on and so forth.
So what it really boils down to is how they run their
business. If they're providing good service in their
local communities and they build a good reputation
for themselves, they'll be successful and if they
don't, if they've been in the business and they're
not on top of their business and they're getting
complaints about installs or people don't understand
how to use the product, then you're going to have
problems of course.
C. Ergen But again I think that all the people who are in
distribution business today, in the consumer
electronics or specialized retailers are still going
to be in the business. But you have to understand the
consumer electronics stores are also going to be in
the digital cable settop box business and so they're
going to be giving the customer a choice of a digital
settop box. That's probably an opportunity that
you're not going to have as a specialized satellite
retailer. The cable company's probably not going to
deal with you directly, but probably will and wants
to deal with the big consumer electronics companies.
So you're going to have competition no matter what
and you can complain about it or you can go out and
focus your business to be the best.
I went to a restaurant the other night in Denver
that's a local restaurant and it was packed and it
competes with the chain restaurants that are
nationwide and that local operator is probably making
a lot more in his or her restaurant than the chain
store is making in their local restaurant, but they
have great service and great food and great
reputation.
J. DeFranco Tom's Hamburgers instead of the M word? Anyway, we've
got a lot to cover here. The next thing that's
obviously in recent history, in fact I don't think
you had a chance to really talk about it since we've
actually got it into service is Echo VII. So we have
Echo VII in. There was a lot of uncertainty. It's our
first spot beam experience. Right? The first time
we've had spot beam, a little uncertainty of what
exactly to expect. Why don't we talk a little bit
about that.
C. Ergen There's a couple things that have happened. One is
we're not sure where those spot beams were going to
go and how big those spot beams were going to be so
we were concerned that the spot beams are not
perfectly ... or the DMAs that are out there in local
areas are not perfect circles and so our spot beams,
we were concerned that maybe on the edge of the spot
beam we'd have some problems. It looks like on
preliminary testing that we're not going to have much
of a problem. I don't think that we think that many
people will lose their signals from a spot beam. It
does mean that some
________________________________________________________________________________
CHARLIE CHAT PAGE 5
people where we had a full conus signal, so if Salt
Lake City was going to use the full conus satellite
now, it's going to be on a spot beam that means
somebody in a rural area, in a wide area of Michigan
is no longer going to be able to receive Salt Lake
City. So the spot beam actually is a self policing
enforcement in terms of its local DMA. We still have
six cities that are available on a nationwide basis
that we've talked about from time to time - New York,
Los Angeles, Dallas, Atlanta, Denver and Chicago.
Those are still on full conus, but the other ones
will ultimately be on spot beams.
It looks like the satellite's working as advertised
and we're excited about that. And we'll have, I'm
sure some start up problems as we move traffic around
to the spot to free up some capacity. We really need
EchoStar VIII to be up there to do it the way we want
to do it because we don't have the capacity to move a
lot of traffic off while we're maintaining the spot
beams. But we are going to experiment with that over
the next month. Echo VIII is scheduled to launch next
month at this point so hopefully by the end of the
summer we'll get all that straightened out.
J. DeFranco Right. So to clarify today we have a few cities that
are on spots today and that's Charlotte, St. Louis,
Greenville, Phoenix and Raleigh. These are the ones
that actually transmitting via Echo VII on the spot.
Obviously we'll have some additions to that. In fact
we go an announcement today, Charlie, Grand Rapids,
so we'll have Grand Rapids going up.
C. Ergen What's the date?
J. DeFranco That's a good question. What's the date? The 22nd,
May 22nd, Grand Rapids and we have a slate that shows
all the channels of course that will be on there.
C. Ergen All the channels in Grand Rapids, seven channels
going up May 22nd. I'm sure we have a big advertising
campaign there, a big PR campaign going. If you're a
retailer in the Grand Rapids area make sure you're
contacting us to get involved in that.
J. DeFranco And we'll have some approved ad slicks that they can
use for that market and obviously we'll have some
other plans as well for that.
C. Ergen We will have a couple of other local markets that
will go up in the next few months depending on how
the spot beam all shakes out and how we can turn it
up. Again we're not able to turn all our spot beams
on because we don't have Echo Star VIII yet, but
there are some that we will. As it turns out if we
have reasonably [inaudible] Grand Rapids and Chicago
is on a national beam so it frees up some capacity
there.
J. DeFranco One thing that's important for the folks who were at
Team Summit, I don't believe that we talked about it
on a prior chat, but we put up some tentative
________________________________________________________________________________
CHARLIE CHAT PAGE 6
cities at one time. At Team Summit we showed some
tentative cities and they were that, tentative
cities, and of course we didn't have the spots up at
that point in time so didn't know exactly where the
spots would fall and so on. And so we're re-looking
at that and there could be some changes to that.
Right?
C. Ergen Could be some changes, could be some additions, could
be some deletions, but in general that's the kind of
areas we're targeting. But you never know, I wouldn't
build your business around it until we know ...
J. DeFranco Yeah, but it's the same as what we talked about in
the past.
C. Ergen You folks in Grand Rapids should be excited and we're
going to be ready to go I guess in two weeks.
J. DeFranco Okay. Some other programming announcements, we want
to bring you up to speed on. We've got TVN24, I think
you let you know this, this launched April 30th.
Here's a clip and it's Channel 609 and that's at 61?
and 148 and it's $9.99 a month ala carte or $19.99
with PolSat II and Radio Maria Poland. We have a free
preview until June 30th so anybody who was receiving
our Polish programming previously would get this.
C. Ergen You may have talked about that on a previous chat,
but I guess the Polish channel we had ...
J. DeFranco TV Poliona.
C. Ergen TV Poliona decided not to renew their contract with
us so we had no control over that. We tried to renew
that contract, we would have liked to renew that
contract, but were unable to do so, so that channel
is no longer available from us. We were able to get
the 24 hour news channel, Polish channel and that's
up today, along with the radio station and PolSat.
Prices have been reduced, free preview period and I
know this affects some of you out there. And again I
talked to a lot of you at Team Summit. We did try
awfully hard to continue the TV Poliona signal, but
weren't able to reach accommodation for what they
were asking.
J. DeFranco So we'll have it discounted, like you said, Charlie,
$7.50 will be the discounted price for the service
that we had, that you mentioned, PolSat II with radio
Maria, $7.50 discounted price.
C. Ergen What do you mean by discounted $7.50, seven dollars,
fifty cents?
J. DeFranco Yes.
C. Ergen A month?
________________________________________________________________________________
CHARLIE CHAT PAGE 7
J. DeFranco Yes.
C. Ergen Okay.
J. DeFranco And $14.99 is the standard price on that, after June
30th is when that will go into effect. Okay, CNNSI,
another programming announcement. This is one we had
no control over at all and basically Turner decided
to take CNNSI off the service. I don't know if, I'm
sure they had some plans to do some other things. But
at this point we don't have anything to announce, so
that will be May 15th that that will come off.
C. Ergen Not all channels make it. I would imagine over the
years as we come ahead that some channels will come
down just because they don't get enough coverage to
financially make it, so sometimes it happens.
J. DeFranco Yeah and obviously out of our control. Special event
coming up, I think we did mention this previously,
Rumble In The Rockies. This is an event, a
fundraiser, it actually involves the fire fighters of
New York and police of New York with the Denver
folks. They'll have a boxing match, Saturday the 25th
and that is 8:00 p.m. and there's no charge for that
service, so everybody will be able to see that.
Charlie, we've had continual questions about where
progress is coming in HD and of course Discovery has
talked about HD. And there are some other new
services or at least there's more programming being
developed, in the development stages in HD and so
constantly we get questions about what's the update
there. As it relates to Discovery, I know that we
have had some discussions with them. Maybe you want
to elaborate on that.
C. Ergen Discovery is planning a summer launch of a high
definition network. Again we're talking with them
about that, obviously capacity is an issue as well
for that. Mark Kuben of course who does high
definition HD Net was at our Team Summit and those of
you who saw him on the panel know that he's got a lot
of things going on and he's got some things that at
the end of this year will be available going forward
and there are lot of other talks in the work. But we
plan on being the leader in HDTV from a national
perspective. We obviously have a great [inaudible]
receiver at 6,000 that's capable of that, that is
capable of terrestrial HDTV as well if you put up an
offer antenna. So we think we have some good products
and we plan on moving them forward.
Our new relation with RCA is going to be helpful
there in terms of making sure that the TV sets
continue to come down in price. But we announce that
again the merger is what allows us to become the
leader in HDTV because of the tremendous bandwidth
that HDTV takes up. Again today we have everything up
there that we can put up there of value and we just
keep working with the programming folks to get more
and we'll have
________________________________________________________________________________
CHARLIE CHAT PAGE 8
announcements when we have announcements.
J. DeFranco Right, as things progress or when we actually have
something that we can talk about. Let's talk a little
bit about some changes to our promotions in addition
to that. Before we got that though we've got showroom
accounts, so as you know last year we started
charging for showroom accounts, it was last summer.
We didn't give you much notice last year so we
allowed you to credit that against your co-op or send
us a check, whatever you wanted to do there. This
year we will send you a bill, you will need to remit
the $60 fee for your annual subscription for your
showroom account. Those bills will be going out over
the next two or three weeks, it will be for the June
billing period. So I believe they'll start going out
next week and they go out over a period of time so it
could go into June before you get your bill.
Obviously, this is the way that you can pay that and
we want to make sure you're aware of that.
C. Ergen That's the best way we police our showroom accounts.
There is a small charge, it's very minimal, but there
is a small charge for it that allows us to police
that very easily and efficiently in terms of how
we're doing that and it keeps the paperwork to a
minimum since you cannot use co-op in the future.
J. DeFranco Promotions, so we've got something, a new
announcement on DHP and this is pretty exciting. You
know, Charlie, again because you missed few shows I'm
not sure if you heard some of this feedback, but we
got a lot of feedback about the inconsistency in our
DHP program because we have some people who use the
certificates to promote DHP and we have other
retailers that actually have the hardware in hand, go
out and do the install and of course the compensation
changes on that. And because the certificate was
something that we sold, we really had an MSRP on it
and of course we only co-oped a $49 price point on
that. But it wasn't that we weren't consistent in
that, our rules required the retailers to charge the
$49 activation fee for those of them who were
handling the hardware and doing the install. So we
have made a change there after actually Team Summit
again drove that. Even though I'd heard it previous
to that, we got a lot of feedback at Team Summit
about being consistent.
So while we still strongly recommend obviously that
you do get that $49 from the customer for the
activation fee in DHP, obviously it's your economics,
but we are not going to enforce that so it's up to
you and if you choose to discount that, that will be
your choice. We will not co-op ads that don't reflect
the $49 though so you do have to continue to put that
in any of your advertising. But we have changed the
rules and that will be in the blast fax as well and
it is changed in the business rules. What's the
effective date on that? Today? So that's today.
PVR, so we've got some good news here. We had a PVR
upgrade. It wasn't an overwhelming demand for this,
but it was for new customers only. And
________________________________________________________________________________
CHARLIE CHAT PAGE 9
we did get some feedback again from the retailers
that said what about existing customers who are
upgrading to PVR? You have an upgrade program for
existing customers at $199. What about if those
customers want to take advantage of the second
platinum remote?
And the way that promotion works is if the customer
buys a platinum remote at the retail price which I
believe is $49.99 or something like that, then we
will give them the second TV hook up, the labor to
hook up the second location for free. So we have
expanded that so that existing customers who take
advantage of the PVR upgrade can also get that
benefit. So if they buy the remote from you, you'll
get the margin and the remote, as well as you can
send in a claim to us and we'll give you an addition
$25 for your labor to hook that second TV up.
Obviously, and Charlie you've been an advocate of
this and it's common sense, that if a customer
doesn't need a different video on a different TV,
they may have three TVs or four TVs in the house, but
don't watch any more than two channels at the same
time, hooking that PVR in the family room and in the
bedroom as an example gives them the benefit of
everything that they have on the hard drive, all the
great features of PVR without the expense, the extra
$5 a month and the hardware cost of putting in an
extra receiver.
C. Ergen Right and they've got the benefit of the PRV so that
is I believe a much better product than what the
cable industry might have with an analog slot. But as
they go to digital they're going to catch up with us
so it's important that you make sure your customers
understand that. I know when I've talked to countless
number of people over the years who say yeah I got
three TVs in my house, I need to be hooked with three
TVs, so I'm still on cable. And when you explain to
them that with two receivers, one of them being our
PVR, they could hook up all three TV sets and you
fully explain it to them, they're pretty excited
about that and it's a pretty easy sell to them.
J. DeFranco Well they get the benefit of the PVR plus ...
C. Ergen These guys all know this and we've just made it a
little bit easier for you guys to do it now.
J. DeFranco Okay. In addition to that ... oh and by the way, the
business rules for that are all on the website. Make
sure you get the rules for how the claims and
everything works so you have that. A couple of other
things. Last show we talked about, Charlie, that we
had a group of customers out there that we offered a
free Dish 500 upgrade to. They got a special letter
and there was some confusion. We actually heard back
from some retailers that said they got confused on
what the letter is. There have been, I think we've
had more letters go to groups of our customers in
recent history because of spot beams and so on and so
forth than we have in a long, long time. So we want
to make sure you understand there have been a couple
letters that went out. In regards to spot beams we
had some letters where we thought perhaps
________________________________________________________________________________
CHARLIE CHAT PAGE 10
somebody's signal could be affected if they were
receiving local networks and they were on the fringe
of the spot. There was a letter that went out
relating to must carry and the fringe signals where a
customer could get a second dish. Those two are not
free Dish 500 free upgrades.
The one that's a free Dish 500 upgrade did go to a
specific group of customers. Again as we talked
about, we're always trying new things, we know that
we want to get these customers upgraded so we picked
a select group. In their letter it does say you are
entitled to a free Dish 500 upgrade. So those are the
ones that you can do and send it in as a claim to us
and you'll be reimbursed as if they did commit to
AT150 even though in this group of customers they're
not required.
C. Ergen They have to get the letter from the customer?
J. DeFranco That's right and include that with their claim and
everything else that's required, the Dish 500, the
UPC label.
C. Ergen The can participate if they get the letter?
J. DeFranco That's right. So again just some clarification,
that's not a new announcement.
C. Ergen But that's something that probably went out to a very
small number of people?
J. DeFranco That's right. We had a couple of retailers say well
gee I didn't know about this. A customer called me
and ...
C. Ergen I didn't know about it, so what the heck, so it
couldn't have been very big.
J. DeFranco That's right. What else have we got?
C. Ergen It seemed to me if we were going to do that why don't
we let the dealers know we're doing it. Just hello
peanut gallery there, if the dealer's going to
participate let's let the dealer know he can
participate.
J. DeFranco You mean when we do it as opposed to after?
C. Ergen Yeah, that would be a simple thing. We might let the
CEO know.
J. DeFranco Like you said, you didn't know.
C. Ergen More importantly why would we not. If we sent out
letters to Little Rock, Arkansas, why don't we let
the dealers in Little Rock, Arkansas know we sent the
letter so if the customer comes in with a letter they
can participate, it would pretty simple, pretty easy.
________________________________________________________________________________
CHARLIE CHAT PAGE 11
J. DeFranco Okay. One other thing, a promotion that we have a
little housekeeping, we want to make sure that you
understand that because again this is feedback, we
got questions from retailers. Any promotion that
requires a commitment on the part of the customer
requires you to send in the claim form. And a good
example of this is if a customer takes advantage of
1-2-3 TV, but only gets one receiver, you say well
why do I have to do a claim form because I'm not
claiming anything because as a retailer I don't get
reimbursed anything because I didn't give them
anything at a discount. That's true, but by the
customers getting three months free in 1-2-3, they
have committed to a one year commitment of
programming. So that's why we still need the claim to
come in because it has the customer commitment on it.
So again go to the retailer website, but occasionally
there are things that are a little confusing, but
that's the background on that.
Okay a couple of other things. We want to make sure
you're up to speed and that you're filling out the
Equifax applications. So if you're participating in
DHP, as you know we're doing credit scoring, we've
got an opportunity for you to save some money there
and in addition to saving money you're also going to
be able to probably get a little better result by
using Equifax because that gives us more of a
capability based on geography on which bureau to use.
So you definitely want to ...
C. Ergen So we have a little higher acceptance rate.
J. DeFranco We will have, we're not quite there yet, but it will
be implemented very soon.
C. Ergen So it costs them less money and you'll get a slightly
higher acceptance rate, so you want to use that.
J. DeFranco That's right. One other thing on DHP, we've got on
the DHP agreements we have added three places for the
customer to initial the agreement. We want to make
sure they understand all of the content of the
agreement, again some feedback we got from our
customers.
C. Ergen I think the main thing is we own the equipment, they
don't and if they don't honor their commitment there
is a charge to them. And we have a list of excuses a
mile long from customers who didn't read the
agreement or didn't understand the agreement. So
protect you and to protect us we'll require that we
get initials so that we can verify that in fact they
have looked at the agreement. Obviously we can't
force them to read it, but we can certainly force
them to look at each page and that's going to start
May 13th I think and if we get claims that don't have
the initials on May 13th, then we'll reject them. So
what day's today?
J. DeFranco The 9th.
________________________________________________________________________________
CHARLIE CHAT PAGE 12
C. Ergen Not much notice, but ...
J. DeFranco We talked about it previously.
Female And we've been pretty generous because we were going
to start enforcing that right away and then we
realized that we had some resellers who weren't in
compliance. So please help us help you, want to pay
you.
C. Ergen There will be no more grace period after the 13th,
May 13th is D day there.
J. DeFranco Okay and one other thing, we don't have details here
because there's such a variance, but we have a lot of
retailers out there, Charlie, that are doing
telemarketing to acquire subscribers and they get
lists of leads and that's how they choose to contact
customers. It can be an effective approach to selling
the product. We want to make sure though that we
reinforce that you should check on what the local
laws are in your states or in your local areas so
that you are complying with whatever the telemarketer
...
C. Ergen I know in Colorado starting in June or July, if
people's names are on a list you can't telemarket
them, there's a new law.
J. DeFranco There have been recent changes and you need to make
sure that you keep up to speed on what the
regulations are associated with various ... it's just
like we have some retailers who go door to door. Well
in some areas you have to have permits, in other
areas you don't and so on and so forth. You need to
make sure you know what the rules and regulations are
in your areas if that's what you choose to do.
Okay, Star Band, Charlie, we've got some more changes
coming with Star Band as it relates to some of our
existing customers. Obviously there were a lot of
customers that we did the billing for and we did the
customer service for. And in our resolutions with
Star Band and getting our relationship settled, we
talked about this previously, I don't know if you
want to expand on it on a more global scale. But we
have come to the conclusion and with the agreement of
Star Band that any consumers who activated prior to
August 1, 2001, the billing and customer service to
those customers will go back to Star Band. So Star
Band will be handling the billing and the customer
service to these customers. The customers that we
activated after or starting with August 1st we will
continue to provide the service to and continue to
bill. So it doesn't affect the retailers other than
they should be aware of it.
C. Ergen But the retailers, their showroom accounts you need
to got to Star Band for your showroom accounts so all
your questions should go to Star Band. They're going
to have a more educated workforce to answer your
questions in terms of your showroom accounts that we
are. So all this is a transition that it's going
through so that economically we're supporting Star
Band
________________________________________________________________________________
CHARLIE CHAT PAGE 13
where we can from an economic perspective, but we
can't afford to lose money on support for something
that we don't get paid for or enough to do it and the
costs there are fairly dramatic and Star Band
believes they can do a better job at it and they
probably can and therefore making that transition
back to the way it was before.
We tried the experiment so really this is pretty much
the way we started with Star Band, really nothing's
changed too much other than we still bundle, we still
can put it on the same dish and that's really how the
original agreement with Star Band started. I think
everybody thought maybe we could put some things
together and save some money. As it turned out, that
wasn't the case and Star Band's a lot more focused on
this than we were and so we've kind of gone back to
the way it was before. Customers will get a letter on
this, those Star Band customers will get a letter by
the end of the month explaining this.
J. DeFranco So if you get a call from your customer saying what's
this all about, it's just that Star Band will be
doing the billing and the customer service. Their
service won't be interrupted, nobody has to go to
their home or anything like that. But it's important
that you know that if one of your customers calls
you're aware of that. And as you mentioned, Charlie,
but just to reinforce, we are still honoring the
discounts so if a customer subscribes to AT150 and
has the Star Band service they'll get a discount on
both services.
C. Ergen We're still an owner of Star Band, a minority owner
and we just can't do it without making a profit at
it. The bundle is something we're willing to continue
to do because we've had it before and we think that
helps our customers, it helps us compete long term.
And obviously we're very hopeful that broadband
continues to get better and more economical. We have
to have a path to do that, we haven't quite seen that
path yet, but Star Band has a path, they believe they
can get there on and we're supportive of that.
J. DeFranco Okay, Charlie, let's take some phone calls and answer
some questions. You're welcome to put the number up,
you're welcome to call in. And we've got a list of
emails that came in just recently so the first one
has to do with our six receiver capacity as it
relates on a per account basis, so we can have up to
six receivers on an account.
This is from Tommy at Sound Wave in Texas. And he's
saying, what if a customer needs more than six, isn't
there anything you can do? And also he's asking about
some of the issues relating from an economic
perspective at a customer that has four, five or six
receivers at a $5 fee, is there anything we can do
about the $5 fee to minimize that with the
competition we have from cable?
C. Ergen Okay, well a couple things. One is the six customer
limitation, the only thing you can do is, is you can
put another account and they start all over again,
________________________________________________________________________________
CHARLIE CHAT PAGE 14
but they don't get the service for free, but they
must have another account. Again, six individual
receivers in a house would be ... if a customer has
more TV sets than that, they can normally afford to
pay some more money and that's a limitation of our
system, the six, and I don't think we're ... it has
not been a major issue, it's probably not something
we're spending resources on to change. So if you have
somebody who has to have eight or nine receivers in
their home they can have two accounts, one for six
and one for three if they want to be a Dish Network
subscriber.
As far as the $5 a month for extra receivers, first
of all when it comes to digital cable, the charge
typically $5 or more. I've seen $6, or $7, or $8 per
digital settop box, so we know we're very competitive
there and because we subsidize the second receiver,
again in digital home plan for example we're giving
it away for free, obviously the $5 a month goes to do
two things. One is we've got monitoring of the system
cost and, two, we've got a subsidy we've got to be
reimbursed for so that is not something that we can
change today.
If you came to Team Summit and looked at some of the
things we're working on then you're aware that we're
trying to do some things internally to the box to
work on that longer term, but today obviously
customers have to understand that there is a second
settop box charge.
J. DeFranco Okay, good. Ed, are you there?
E. Reynolds Yeah.
J. DeFranco Ed, welcome to the Charlie Chat.
E. Reynolds How are you doing?
J. DeFranco Good. How are you?
E. Reynolds I'm fine. This is Ed Reynolds.
J. DeFranco It's good to hear your voice, Ed.
C. Ergen We recognized that name.
E. Reynolds I missed the summit, but I've been sick.
J. DeFranco Well you sound pretty good now. Hopefully you're
recovering well.
E. Reynolds Oh, yeah. I'll probably be with you for another 22
years.
J. DeFranco All right. What can we answer for you today, Ed?
________________________________________________________________________________
CHARLIE CHAT PAGE 15
E. Reynolds I've got a question on a DHP. I've been getting
turned down because of the credit scoring. How come
they've been going up on the credit scoring on a DHP?
J. DeFranco Actually, Ed, I'd be happy to answer that. Normally
of course we don't talk about specifics on credit
scoring, but I can tell you it hasn't changed, so it
maybe the customers you've been attracting have been
going the other direction. I don't know. Obviously we
do credit score. That has allowed us to get more
aggressive in our offers because we're more
comfortable with the customers that we're getting so
that's why as you know we've gone to three and four
receiver type offers. I think you'll see more
flexibility as we move forward and actually we are
continuing to improve the systems so that we can
adjust credit scoring based on the promotion. So as
an example, there would be a higher risk in a
customer that took four receivers versus a customer
that took one. We'd be able to make some adjustment
potentially there and we're actually working on it
very diligently on systems. We're continuing to work
to get some of the other credit scoring agencies
involved so we make sure we get good, accurate
information and there isn't anything we want more
than to be able to approve every customer with some
type of a promotion, certainly that's our goal.
C. Ergen But if a customer turns on us, it's charged back to
you ... so it's a negative return for us which means
then we're not competitive in the marketplace. You do
have, Ed, of course a chance in terms of our offers
to sell equipment, cash and carry, we have good
offers there and if a customer doesn't have a couple
hundred bucks for cash and carry offer it's not
likely they're going to pay us on DHP. And we do take
a deposit now, right? So if you've got a customer who
doesn't pass the credit score you can and you may ...
E. Reynolds It's actually not a deposit, it's better than a
deposit.
C. Ergen Better than a deposit, it's prepaid. They can prepay
$300 for a prepaid programming. They do get that
credit back $25 a month and starting month 13 they
get $25 a month back. So here you've got a customer
who complains to you, Ed, and says I love this one,
?Gee, I didn't pass credit, I really wanted the
system.? Well, okay they can prepay for their
programming and they get that money back and that's a
little bit of ... they couldn't prove their credit to
us, but we take their word for it that they're good
customers or they don't have credit cards or they
don't want credit or whatever it is, then we have an
option for them to prepay the programming so they get
it back starting month 13 though month 24 at $25 a
month. And that's working well for some folks out
there, particularly in rural America where folks
don't have credit cards or whatever.
J. DeFranco Good alternative. Okay, got another question here,
this from Ed, a satellite guy in Florida. And Ed is
saying why is it that dealers have to penalize our
DHP customers who wish to add a third or fourth
receiver onto their existing
________________________________________________________________________________
CHARLIE CHAT PAGE 16
system after the initial install? By the time we add
up the cost of the receivers and the quad and the
labor and so on it gets very expensive. And I think,
Charlie, I'll address this one.
This is one we recognize, we understand that prior to
us offering third and fourth receivers, obviously if
the customer had an option at the time of activation
for a third or fourth receiver then hopefully you
sold them that at the time and matched them up with
the right product at the time. But we understand that
prior to us having third and fourth receivers, we had
some customers that have this request. We actually
are working on programs that will allow these
customers to get what they need in DHP and you'll
hear about that in coming weeks.
C. Ergen But again, it doesn't require a different fee, it
does require some different switching, so it is more
complicated and I believe outside of DHP so compared
to that, when you go out to a customer, you go
through the system and explain it to them so that
they get what they need the first time because it is
much more costly and tough to come back in.
Again with the merger obviously we're going to have a
chance to go back into a lot of customers with the
merger so a lot of times I recommend to folks hey if
you can hold on to some of the upgrades and stuff,
realize the customer is probably potentially going to
get a better deal once our merger is approved because
we have to go back to a fair number of our customers
anyway.
So those are your kind of options. One is first give
them the right thing in the first place, make sure
you explain UHF to them and PVR so that they are
aware they don't always have to put a separate
receiver in a TV set and let them know that we can do
multiple receivers in our DHP. And one you do that
hopefully 90% of the time, you're getting the
customer started out right.
J. DeFranco This next question is from Joe at Marketing Products
and this has to do with DHP as well. It says, is
there a site where we can go to qualify a customer
for the Digital Home Plan certificate before we sell
them the certificate? So they're doing certificates
and what they're saying is that when they sell the
certificate they don't know if the customer qualifies
because we do say on there what the requirements are,
but they aren't sure whether the customer will meet
the credit scoring criteria. So interesting question,
I don't know whether ...
Female At this point the credit qualifying for these
customers is done at the time that they call to
schedule their installation for the Digital Home
Plan. But please understand that our agents are very
skilled now at converting these customers and we will
pay you if you add a Digital Home Plan certificate
customers. If the customer does not credit qualify,
we offer them alternate DHP right away and if they're
not able to do that program then we do fall
________________________________________________________________________________
CHARLIE CHAT PAGE 17
back and offer them 1-2-3 free. So we make every
effort to take that customer who's not credit
qualified and qualify them so that you can get paid
for that customer.
J. DeFranco Okay, good. We've got another caller. Charles, are
you there?
Charles Yes, I'm here.
J. DeFranco Welcome to the Charlie Chat, Charles. What can we
answer for you today?
Charles Good afternoon, Charlie and Jim. I had an interesting
phone call this morning, it was from one of my
customers I put an RPVR promotion in for about eight
months ago, is a Wal*Mart Electronics Department
Salesperson. And when she called me, she said she had
a letter come down from the main office yesterday
saying that they would be selling Dish Network
starting this month and I was calling to check on
that. And if they are, then how's that going to
relate to the new Dish Pro system and being customer
oriented for installation?
J. DeFranco That's good. I can assure you that they won't be
selling product in the stores this month. We have had
some discussions with Wal*Mart through our
relationship with Thompson. I think Thompson may have
talked ...
C. Ergen RCA is licensed from EchoStar today and in fact the
Radio Shack relationship is an RCA relationship so
RCA could go through their distribution. They're not
prevented from doing that and obviously Wal*Mart, RCA
could go through Wal*Mart, it would not be something
we would be doing directly, I don't think.
J. DeFranco No, I'm sure that we're not.
C. Ergen And I have not heard that Wal*Mart and RCA have any
kind of agreement. But you might fax us the letter
[inaudible], but we wouldn't be opposed to it.
J. DeFranco Let me expand on that, Charlie, because I think as we
talked about, we mentioned Radio Shack earlier in the
chat and also we've always said that our goal is to
get the maximum distribution with minimal
cannibalization of that distribution. But the most
important thing is that anybody that carries our
product makes money. I remember back when the clubs
picked our product up and some of the retailers said
well gee what are we going to do, Sam's has it,
CostCo has it, what's going to happen? And of course
we never heard anything about it because while we
don't control what they sell it for, I think the
pricing that they're at is about $20 or so below our
MSRP. Obviously in a retail situation where you're
talking to the customer, certainly your knowledge and
ability to sell has got more than $20 worth of value
to it and the customer does want to make sure that
they're getting their needs met as far as the
specifics for their particular application. The
philosophy hasn't
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CHARLIE CHAT PAGE 18
changed, I would expect that that would still apply
should we get into Wal*Mart. That's interesting, I'm
sure our salespeople would be interested to hear that
because I know that we certainly haven't gotten any
confirmation of that yet. But I think what's
important is that there is profitability in it for
the retailers to sell the product.
C. Ergen And again, I think the competition ... in 22 years I
always ... at Team Summit I said I know the one
question I'll get is you open up a retailer across
the street from me or some other retailers in the
business. Our main competition is coming from cable
and those retailers, the electronics retailers that
you guys are worried about are going to sell cable
product. That's where your true competition is going
to come from and cable sales of course direct to the
customers themselves. That's where our competition
is. It is getting stronger and tougher every day. We
know that from the trends that we see in the
business. It's costing more to get a customer. Our
churn rates continue to tick up as people churn off
to broadband bundles and digital cable so we have to
be prepared for that. That's why we have to change
our business and again that's why Team Summit was so
important because if you're doing the job in your
local market you're not going to get penalized no
matter what the distribution is out there.
J. DeFranco Okay, got another question, this is from Mark at Star
Gate. He says, are we ever going to see the twin
tuner PVR? Also, are there plans to produce an HDTV
PVR?
C. Ergen Twin tuners, that's Star 721 which we showed at Team
Summit. I think our engineering team was going to
have that out last year and as usual take a little
longer. I've been playing with one at home, it's
getting pretty close, but ...
Male Yeah, the 721 is actually is getting very close and
we're excited to see that product launching actually
the beginning of next month. Late this month we
should start seeing quantities showing up in the
market. There will be small quantities at first, but
ramp up from there.
C. Ergen So about the first of June, so we're only about three
weeks away from shipping that. I know you've still
got some software issues, right?
Male Right, we're very close, just a few minor ...
C. Ergen And you do have to hook up both tuners, that's the
one thing I learned is you do have to hook up both
tuners to make it work so you don't put it in just in
the one tuner solution. So you do need, if there's
only one receiver in the house use twin, but if
you're going to go to multiple receivers, you're
better off to use a quad, but it is a fantastic
product.
J. DeFranco So actually good point. Next chat is May 30th, we'll
talk about the product
________________________________________________________________________________
CHARLIE CHAT PAGE 19
again then and actually go through the economics
again so that you're aware of it.
C. Ergen HDTV, PVR we are working on that. Obviously it's
become a kind of chicken/egg problem because we don't
have enough ... With the merger we think that with
the content that we have and the bandwidth we have,
then we think that becomes a compelling product.
Without the merger that's not a compelling product
because we don't have enough HDTV to warrant it.
J. DeFranco Okay. Next question is from Tim and Tim says is there
a channel that demonstrates surround sound better
than others? And I assume he means Dolby digital and
obviously we do have several channels that are Dolby
digital. Maybe we can ...
C. Ergen We used to have a test channel. I used to be able to
go to a test channel for Dolby digital. I don't know
if we still have that or not.
Male Yeah, actually we do. I believe it's 9480, there's a
Dolby digital test channel and then of course there
are other channels as well that were broadcast in
Dolby digital, there's HBO, Starz and several of the
Pay-Per-View channels.
C. Ergen Why don't we put it in the blast fax?
J. DeFranco We'll put the details in the blast fax.
C. Ergen Good question.
J. DeFranco That is a good question. Okay, we've got Doug on the
line. Doug?
Doug Hi, Charlie, Jim.
J. DeFranco Welcome to the chat. What can we answer for you
today?
Doug I had a great time at Team Summit and the customers
really like the caller ID, the onscreen caller ID,
but on the boxes it comes deactivated. Since 99% of
the customers want it activated, is there any way
that we could have it automatically on out of the
box?
Male The current set up is the default is with it off, but
all it really requires is just going to the set up
menu and select it to be in the on mode and of course
naturally you'd have to have the receiver hooked up
to a phone line and the customer has to be
subscribing through the caller ID service, but there
is a step that's involved.
C. Ergen I think the question is what's the negative of having
it being on? Maybe there's a negative. In other words
if it comes out default on, you just got a suggestion
from your customer and all you did was tell them what
we do as
________________________________________________________________________________
CHARLIE CHAT PAGE 20
opposed to answer his question. If it comes on, if he
doesn't hook up a phone line, does it cause some kind
of a problem? If he doesn't subscribe to caller ID,
does it cause him problems or does it cause no
problems? If it caused no problem, then why make an
installer go in there and have to change the default?
He has given us a suggestion, I haven't heard an
answer why we can't do it that way, there may be a
technical reason why we don't do it that way.
Male There may be, I don't know specifically why the
default is in place.
J. DeFranco We'll check it out. We'll take a look, that's a darn
good question, Doug.
C. Ergen Darn good question, check it out. I'm going to guess
there's a technical reason why we don't do it that
way, that it causes some problems if you don't have,
if you don't actually subscribe to it or plug the
phone line in. But if not, then I think we can take
your suggestion and do it that way.
J. DeFranco Interesting, okay. This comes from Conrad Satellite
and he says, will we get (he's talking about the
recent announcements with Earthlink and SBC) will we
get some type of showroom account for DSL when it's
available? And number one I don't think we know the
answer to that, obviously we don't have those
relationships.
C. Ergen We're going to be in the test mode there for a while.
With SBC we don't go across the whole country and
actually we don't go across the country, neither one
of them go in every place, but we will check into
that, good suggestion.
J. DeFranco If there's something to demonstrate, if it helps
enhance the ability to sell the product, it would
certainly make sense.
C. Ergen Or they may charge a discounted fee. Certainly you
could get an account if you're willing to pay the
price. Our relationships ... in broadband today until
we can get the merger done and get a new generation
of satellites, our philosophy really is to work with
the broadband providers whether it be a Star Band, C
Satellite or whether it be regional Bell operating
company or Earthlink. For them to provide the
broadband service we will do that as basically a pass
through to our customers, but we're not making an
investment in the capital equipment either where we
couldn't get a return on our profitability. So we're
going to make the investment in the video customers,
they're going to make the investment in the broadband
customers, it's kind of a joint marketing agreement
so the customer gets the benefit of the bundle. We
can compete against cable with that and that's kind
of the focus that we're moving forward. Otherwise
we'd go broke trying to do, doing broadband, we've
[inaudible] to either one of them.
J. DeFranco Okay, next question. This is from Chris at Picture
Perfect and Chris is asking about our retail locator
on our website. He says that it's a very good
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CHARLIE CHAT PAGE 21
tool, he likes it, but he says at times there are
customers in our area that can't find us under their
zip code, is there a way to correct or update this
locator and correct this problem? I'm not sure if
this means that you feel there are other zip codes
you should be listed under of if your information is
incorrect, but in either case you would go through
whoever your hardware provider is. So whoever you
purchased your hardware from, whether it's EchoStar
or a distributor, they are the ones that administer
that list to us and then from there we can check. If
you think you should be in another zip code of course
we can take a look at that or if for some reason the
information isn't correct and naturally you want to
get that corrected right away. So that was a good
question. John are you there? We've got another
caller.
John I'm here.
J. DeFranco Welcome to the Charlie Chat. What can we answer for
you today?
John Thank you and great to see you all at Team Summit.
Finally we got HDTV in the Shreveport, Louisiana area
and it's brought about an interest in the 6000 for us
and I was wondering if that was ever going to be
covered in the DHP? It seems like I remember in the
past that if we had an extra receiver that the 6000
would be covered under the warranty. You buy the 6000
for the additional cost, but you have the customer
also set up on a separate DHP plan say for two
receivers and the 6000 would be covered under the DHP
warranty.
J. DeFranco Good question, John, and actually let me clarify
that. You are right, there's a way to do that. First
of all, the reason that it's not at least for the
foreseeable future hopefully as HD expands maybe
we'll be able to do that, but obviously our DHP
customers we want to make sure we can provide them.
One of our commitments is in home service and to do
that of course we would need 6000 on all of the
service trucks and you'd need more and so on and it
just isn't practical today because of the number of
people who are interested in a 6000.
But you are correct in that you can, let's say your
customers need three receivers in their home, you can
sign them up for two receivers DHP and you can either
do a 501 or 301 or two 301s and then they can
purchase the 6000 and the 6000 would be covered under
the in-home service. But obviously if the customer
had a problem technically, in other words if there
was a failure in the 6000, they would still have to
go through the other service process to get it
repaired.
C. Ergen There would be no charge to it as long as it wasn't
lightning or something that wasn't covered under
warranty or covered under a normal warranty.
J. DeFranco That's right. I think lightning may be, I'm not sure
[inaudible]. So that answers that question. Charlie,
we're winding down. I don't know, do we
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CHARLIE CHAT PAGE 22
have another other callers? Okay, so why don't we
talk a little bit ... do you have any closing
comments? We're going to talk a little bit about our
trip, we finally got our hotel for Cabo, so that's
exciting, we're going to show that in a minute. Any
closing comments before we go over to the Dish Pro?
C. Ergen No, I think we have a lot of stuff coming and again
we're working very hard to make sure we have an
industry out there. I wish we could spend more time
running our business than spending time in
Washington, but these things are very important for
our industry.
I think that we have a good track record as a company
in seeing the trends before people see them and I
think when we started talking about local/local, it
was probably about 1997 and nobody else really
focused on that. I don't think we'd have an industry
today if we didn't have local/local in the cities
that we do have it and yet we're the first ones
really to see that as necessary. And again trust me,
that the merger is necessary for our industry to
compete the way we want to compete as opposed to just
being a relegated ... if our opponents have their way
and it's amazing to see rural Senators and
Congressmen who have voiced concerns about the deal.
We won't have broadband in rural America and we won't
have local in rural America and that's not good for
rural America. The NRTC, who causes most of the rural
disturbance and politically very strong that's all
about money. They have an agreement with DirecTV.
They get paid for every DirecTV customer in their
area. They don't go out and invest that capital in
rural America to do broadband, they don't invest that
capital to do local/local in rural America, they just
get a fee for an investment they made years ago and
that contract is going to run out is my understanding
in a few years and they would like to use our merger
to somehow leverage themselves into a better business
deal. But that by no means is productive or
beneficial to rural Americans. In fact, NRTC their
largest distributors typically charge about 10%
higher than we do for the same service, same level of
service in the marketplace. Hard to believe NRTC can
talk about how they are ... about it, it's important
that you make that ... I know you guys already
understand that, but it is depressing to see
something that's really good for rural America get
misconstrued by people who stand to profit if this
merger doesn't go through.
J. DeFranco Okay, Charlie, we have selected the location in Cabo
for our retailer incentive trip. It's the Sheraton
Hacienda Del Mar in Cabo del Sol and let's show a
little clip here that's pretty exciting. This looks
really nice and, Charlie, I know that ...
C. Ergen I think a lot of the rooms have balconies and of
course you're right there on the ocean and right
there on the best golf course in Mexico.
J. DeFranco As you saw the pace for the top 75 is 11,060;
however, we have many other
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CHARLIE CHAT PAGE 23
ways to win.
C. Ergen Team Summit, I wasn't there for the final round.
J. DeFranco Well, it's funny you mentioned that because the B-52s
were crowding us. We didn't have as much time to
celebrate as we had at prior Team Summits and we
didn't get any brandy.
C. Ergen We got the brandy before that. I got the brandy
before the Saturday night.
J. DeFranco Usually they get us with the brandy and then we end
up giving more trips away than we planned, but we
will have a lot of folks joining us.
C. Ergen What was the date? They didn't show the date, I know
it's in April ... April 3rd or something, though 9th
I'm going to guess.
J. DeFranco I don't see it on my ...
C. Ergen I think it's about April 3rd through the 9th next
year in Cabo San Lucas and it's a great spot. It's a
little bit easier for people to get to, whether
you're on the East Coast or West Coast and we'll have
a lot of fun. I think we have the whole hotel.
J.DeFranco So it's going to be another one ...
C. Ergen One of those deals where if you see somebody there
you know it's part of Dish Network.
J. DeFranco Okay, Charlie, thanks for taking your time. I want to
make sure before we go to the Dish Pro video this is
not just a video that closes the end of the Chat that
you should turn your TV off and go on about your
business. You want to watch this and I'm going to
actually have Paul Langer up here. I will stay here.
We will continue to take more calls and emails if you
have questions about Dish Pro. It's very important.
It's where our technology is going and the engineers
have worked very hard to implement this. And we're in
a phase-in process so it is something we want to make
sure that you understand clearly and how it works.
So, Charlie, thanks for joining us. Our next retailer
chat is the 30th of May. The next consumer event is
actually a Tech Forum, so that will be May 13th. So
that's Tech Forum on May 13th and ...
C. Ergen Are we going to talk about 721? Are we going to talk
about 721 there? I don't know.
J. DeFranco On the Tech Forum, yeah. Okay, so let's go to the
Dish Pro video and then we'll be here after the
video. It's about a 10 minute video and we'll answer
your questions and we'll talk more about Dish Pro
technology. Thanks for
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CHARLIE CHAT PAGE 24
joining us.
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CHARLIE CHAT PAGE 25